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Comment by glenneroo | Hacker News Reader

I prefer the way banks do it here: you don't pay an overdraft fee, nor are you denied (unless you have a non-fixed income). Instead, it's treated like credit and you pay a low percentage at the end of the quarter/year depending on how long you stayed negative. I can't remember the numbers exactly but I've paid at most around 20 Euro after having gone -1000 for more than a month.

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Most US banks and credit unions offer a similar service, called an "overdraft line of credit." Overall I think it provides the best experience for the customer, but there are a few issues. You have to know about it and apply for it. You need a good enough credit score and/or regular income to qualify. And many of the people who currently lose money to overdraft fees would probably just max out their line of credit (commonly $1,000) and then continue to overdraft while also paying $80/year or whatever in interest.

A hybrid approach is the best way to go, IMO.

Like...allow up to $500 to be overdrafted with interest being charged. If you reach $500 in overdraft, then decline any further charges.

Not spending more than you have is the best way to go.

Sometimes you have much more, just in a different account.

Why not just use a credit card?

If you were going to phrase that the way most (inflammatory) articles talk about short term loans (like payday), you could instead say that you were charged 26% APY.

seems like an awful lot of risk for a bank, unless they can see you have the money in another account you hold with them. Still, you're essentially treating your checking account as a credit card yet they are giving you almost no interest rate instead of the 20% seen on credit cards? Seems fishy

I maybe should have mentioned that we also have direct deposit here for pretty much everything i.e. the bank knows where you're employed and how much income you make per month. I've heard from e.g. students without permanent jobs that they don't usually get this perk (anymore). But yes, it's essentially a credit card with very low interest rates, although I have a credit card as well and the debt is automatically deducted from my bank account at the end of the (CC billing) month. There is also a section in the online banking to view CC transactions even though it's a separate entity from the bank, so any changes to e.g. region locking, limits, etc. must be done via the CC website.

This (the bank knows where you're employed and how much income you make) is only possible with one account per person, right?

In the US people that do direct deposit are also treated differently by the banks. Both on the surface, i.e. you get better interest rates, and under the hood (fraud models adjusted).

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